UAE-based fintech business, Qashio, in collaboration with Crowe, a global public accounting, consulting, and technology firm, recently hosted a roundtable to discuss the implications of the introduction of Corporate Tax for finance leaders from the F&B industry.
The event highlighted how the implementation of Corporate Tax will affect the UAE restaurant industry and what restaurant operators can do to ensure their compliance.
The event was attended by 50+ influential senior finance leaders from various restaurant groups and chains, including CFOs and finance managers of major hospitality groups, such as Bulldozer Group, Sweetheart Kitchen, Pickl and Gourmet Gulf.
As an operator in the F&B industry, being aware of one’s real-time business’ financial health is an important factor in ensuring that it is not being run blindly. With the involvement of huge capital investments, competitive profit margins and a levy of municipal taxes and VAT on the F&B industry, the addition of 9% corporate tax could have a negative impact on the company’s budget and/or pricing.
Given that corporate tax is a novel concept to UAE businesses, it is essential for them to fully comprehend the concept in order to budget the time and resources needed to implement these changes. In its Dubai Gastronomy Industry Report, Dubai’s Department of Economy and Tourism revealed that Dubai alone has 13,000 restaurants and cafés as of 2022.
Abu Dhabi Chamber in the F&B and Hospitality sector has maintained growth at a CAGR of 22.2% to hit a record 1,339 new registrations over four years. This showcases the significance of the restaurant business in Dubai tourism and ultimately the economy’s growth and highlights the reason why Qashio and Crowe hosted this roundtable to educate and prepare key players in the F&B industry.
F&B finance teams should begin to plan ahead and carry out impact assessments to understand how the UAE Corporate Tax rules will impact their business. This includes assessing the application of the various rules and regulations and developing the processes and procedures to manage compliance. It is also necessary for the F&B industry to review the systems and implement plans, and build wiser forecasts, as the new tax could have profound implications for them.
“The implementation of the Corporate Tax legislation is vital as it solves a critical issue for the retail and F&B industries’ — the lack of data. Businesses will submit their finances and performance annually, which will highlight waves of data that can be utilized by industry leaders in their decision-making process. This can be information such as what cuisines do well in which locations, what foods are gaining popularity in Dubai etc. This will eventually play a beneficial role for various stakeholders and potential foreign investors to understand the attractiveness of the industry in the UAE,”
Mohammad Al Madani, Chairman & CEO, Al Madani Group of Companies, said.
Armin Moradi, CEO & Co-Founder of Qashio commented: “We understand the difficulties restaurant operators face in managing the increasing cost of supplies and operating with slim margins, combined with handling already complex accounting requirements. Corporate Tax will add an additional layer of complexity, so the sooner F&B operators start working towards its implementation, the easier the transition will be. Spend Management softwares like Qashio are designed to help companies automate their spend-related accounting and keep accurate records, which can be used for both auditing and tax filing purposes.”
For his part, Ashkan Parpinchee, Senior Sales & Marketing Manager at Crowe said: “The UAE Corporate Tax heralds in a new era of transformation of trade and economy. The implications of the regime are far-reaching for all businesses operating in the UAE and especially for the F&B industry. UAE will be seen as a transparent place to do business, which will attract more investors, customers and tourists that ultimately benefit the F&B and hospitality industries for driving that tourism. Our experts at Crowe can share our ethical and impartial advice to help your organisation make smart decisions.”
Another participant in the roundtable, Pauline Ibrahim, CFO, Black Spoon Management and Consultancy, said, “The most beneficial aspect of the new legislation is that businesses comply and gain more control of their operations. Preparation for it is of utmost importance and a roundtable like this helps players be informed of the requirements. I’m sure that this will yield a positive outcome once we get the full picture, as there is no obstacle or criteria that we are unable to tackle as an industry.”
Recent studies show that over 80% of business leaders are prioritizing increasing cash management and payment efficiency and maximizing cash flow liquidity but only about 1 in 3 currently have the capabilities to improve visibility and generate accurate forecasting, and of those, about half are dissatisfied with these capabilities. This is where a platform such as Qashio plays a significant role in a company’s auditing records, especially with the new Corporate Tax regime.